History of Netflix
With high-tech computers on the rise, the 1990s served as a prosperous decade in technological advances. Of that decade, 1993 may have been the most important year; it was the year that CERN released its World Wide Web technology to the rest of the world, allowing users to connect to computers and servers all over the world (“World Wide Web Timeline,” 2014). Arguably one of the most important technological advancements in the last quarter century, the World Wide Web has allowed many people all around the world to connect via internet and introduced a new means of performing business tasks. As advancements to the World Wide Web and computers prevailed, more and more businesses started running strictly online.
In 1997, a
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Taking well advantage of the opportunity, Netflix has emerged as a unique leader in the entertainment industry. With such an idea that led to the formation of their service, marketing and advertising for Netflix had become seemingly easy for the brand.
Current Situation Netflix has done something that most streaming websites could not achieve: legal, easy, and affordable use of movies and TV shows. According to Netflix’s website, this year nearly $1 Billion will be spent on marketing alone, claiming that they are “getting people so excited about our content that they try Netflix” (“Internet TV is replacing linear TV,” n.d.). Taking advantage of the limitless Internet, Netflix has successfully reached their target markets. Innovation of the Internet and at Netflix has made the company able to accomplish its objectives by providing a convenient service and solution for its customers.
Target Market
Through total company effort, increasing customer satisfaction and profits, they have successfully implemented a marketing orientation. Although the customer satisfaction is now at good levels, Netflix suffered a bad spike in customer satisfaction when they hiked up their prices (Stelter, 2014). In its efforts to reach more customers, Netflix has developed a high-quality marketing strategy. With figuring out a market strategy, we must start with identifying the
Netflix is in a fairly favorable position on the strategic group map. Where Added value is measured in terms of instant movies and recommendations, and market coverage is measured in number of stores, vending machines, and online presence.
Netflix was founded in 1997 with the intent to revolutionize the way in which consumers watch movies and television shows. Their accomplishments both in innovation and in customer base for their service indicate that the firm has been, and continues to be, successful in doing so. Currently, the
Netflix finds its competition and strategic challenges against big names in the market –Google, Apple and Amazon to name a few (Roberts & Zahay, 2012). The challenge for Netflix lies in maintaining the innovative streak, which will add creativity and youth to its brand image and the brand itself. This innovative streak has to be continual and has to match the demands and preferences of the customers in their taste and liking. The brand and the company cannot afford to remain stagnant and rigid in the ever changing and demanding market place. The core competency that Netflix will have to focus on to meet this challenge is to develop and train its human resource. Effective and efficient human resource management will allow the company to tap into present and potential customers, as well as, allow the company to serve them appropriately.
1. Netflix’s original marketing strategy offered several flat-rate monthly subscription options; in which, members could stream movies and shows via the Internet or have disks sent to their homes in a pre-paid and pre-addressed envelope. Free from the despair of due dates and late fees, members could keep, up to, eight movies at a time. Upon the return of a disk, Netflix would automatically mail out the next movie from the customer’s video queue. Members were able to change and update their queues as frequently as they liked. The sheer innovation of Netflix’s strategy encouraged several competitors to enter the market to compete directly,
Netflix is an entertainment company that specializes in streaming media and online video-on-demand. Over the years, it has grown to include film and television production and other distribution services. Its business model has changed, and so has its overall production cost grown to keep up with the increased market share. As a result, its current position in the market has made it more exposed to competition from other firms, which is why it needs to develop new strategies to remain profitable. Netflix has grown over the past years despite competition and its unprofitability (Helft, 2007). Therefore, to understand its success, it is important provide a microeconomic analysis of Netflix, its history, its products, and the market.
First formed in 1991, Netflix has become today’s predominant video rental service. They offer a hybrid service allowing DVD delivery by mail as well as streaming movies and TV shows via their company website or access on 200 other devices. Their unique business process has netted them over 16 million subscribers and revenue around $500 million annually. The reason for their growing success can be attributed to a good business model and just as important, properly implemented systems. An extremely efficient supply chain management system (SCM) and customer relationship management system (CRM) have helped Netflix become the world’s largest video subscription service.
Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.
Growing competition as a challenge represents the various companies that are now entering the market of online media-streaming. Companies such as HBO, Amazon, Google, and Hulu Plus have all began to offer media-streaming on the same electronic devices as Netflix, Inc. Currently Netflix, Inc. remains in the lead amongst its competitors; however, there is no guarantee that this advancement is a permanent one. It is inevitable that emerging companies will come up with creative ideas to gain the competitive edge and receive more consumers. For example, Amazon.com has “amplified
As the world entered into the 21st Century, humanity has witnessed an ecology of innovation that ranges from artificial hearts and livers to iPods to Bluetooth technology to smartphones and many more ("21st Century Inventions That Made an Impact”). Each with its own unique attraction has become a catalyst in nature for how individuals think, act and live. Along with these state of the art developments, Netflix has become the cutting – edge service for internet streaming media. Deemed as “a worthless piece of crap” from Wall Street analysts, Netflix with tremendous leadership gained control of their industry and swiftly transformed the delivery of movie rentals ("How Netflix Beat Blockbuster: An Exemplar of Emerging Technologies”). Faced with impossible odds, we will discover how Netflix was able to survive, conquer and prosper as the emerging technology in their industry.
When Netflix was established in 1998, it shook the whole video rental industry by delivering the services that customers actually wanted. It was not about the movies it had in stock, because these were the same with Blockbuster or any other established video rental business. To them it was about how customers can get the best out of what they had to offer.
Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market
Viewing the company’s profile and financial growth over the last few years indicates that Netflix strategy and vision has been implemented successfully, achieving strong strategic growth and a sustainable competitive advantage.
Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?
Netflix was founded by Reed Hastings and Marc Randolph in 1997 and was originally based out of Scotts Valley California. The business model that they were working towards was to create a company that would offer online movie rental service made available by streaming media as well as DVD’s that could be ordered online and delivered to the customers’ homes. (Wheelen, Case 12). Netflix had a strategic plan to undercut the competition in an effort to stress the market and force weaker competition out of the field. This was a very successful plan and over a period of years it was able to force the closings of most of its competing market to include the mega giant Blockbuster video. Using a business
On the communication options front, Netflix should begin a social media and internet marketing campaign pushing the fact that they have the “largest streaming movie selection on the planet,” in order to show that they provide a better service than any of their rising competitors. They should specifically target websites like Hulu and movie review websites which offer streaming television and movie information, as they are a perfect complement to those kinds of services. They should also maintain a strong social presence to interact with their customers and ensure that their customers know Netflix is listening to them and implementing their ideas. One example of this could be letting customers vote on particular movies they want to see added to the streaming library next and focusing upon landing distribution deals for those. Netflix could also launch this “we value our customers” campaign through a series of television commercials to communicate this message out more publicly. These communication options make sense because they heavily target Netflix’s target demographic and, for many of them, their preferred methods of communication and media interaction.